Hospital peak bodies unite on joint position to address private hospital viability

Joint Media Release

THE Australian Private Hospitals Association (APHA) and Catholic Health Australia (CHA) have today released a Joint Position Statement calling on the government to "guarantee and legislate" a minimum private health insurer benefit-payout ratio of 90 per cent.

They say this Joint Position Statement sets out a critical opportunity for coordinated Commonwealth leadership to stabilise Australia's integrated public–private hospital system, which is under increasing financial strain due to $3.4 billion being stripped out of the sector in the last three years (since the COVID-19 pandemic).

In FY23, the benefit-payout ratio dropped to 83 per cent and has stagnated at 85 per cent in FY24 and FY25. Over this period the health insurers reaped record multi-billion-dollar profits and their management fees have soared, while the private hospital sector reported a $34 million operating loss in FY24.

Requiring a return to the pre-COVID ratio of 90 per cent would increase payments to hospitals by 5 per cent, injecting $1.2 billion per year into hospitals and health services, improving sustainability and workforce retention.

APHA and CHA are calling for a Mandatory Code of Conduct for insurer-hospital contracting, overseen by the ACCC, in tandem with a legislated 90 per cent benefit-payout ratio, to ensure transparency, consistency and fair terms across the sector.

To alleviate the burden on the already financially challenged sector, APHA and CHA are also seeking 50-50 co-funding from the government to provide targeted support for the looming nurse wage increases, which will take effect from 1 July 2026.

This co-funding of nurse wage increases ($445 million over four years) will support hospital viability, moderate premium pressures, and maintain national hospital capacity. Both groups cite the precedent of the Commonwealth paying Aged Care nurses' Award rises in full, as well as the COVID-19 Private Hospital Viability Guarantee, as evidence of the government's recognised role in preserving national hospital capacity when systemic risks arise.

Quotes for attribution:

Brett Heffernan, CEO, Australian Private Hospitals Association

"These are sensible, pragmatic measures that will make a massive difference to the viability of private hospitals, while costing the government very little and holding insurers to account.

"Federal Health Minister Mark Butler said in March last year that with high profits and management fees the insurers must pass on much more to hospitals, or he would force them to do so.

"The Minister noted a week ago that "the insurers need to do more to get it (benefits ratio) back up to the average of about 90 per cent of their revenue". It's been a year and the insurers are still coming up short as their profits soar. It's time to make good on his ultimatum.

"Importantly, private hospitals accept nurses should be paid fairly. Private hospitals have long been employers of choice, paying over Award rates and providing greater workplace flexibility.

"However, with pay rises sought in the order of 35% across some 60,000 nurses in private hospitals, on top of the entrenched viability issues the sector faces, the question has always been where is the money coming from? The government has a role to play and 50% isn't a huge ask."

Dr Katharine Bassett, Director of Health Policy at Catholic Health Australia

"Hospital sustainability is not a private sector issue, but rather a national health system issue. If private hospitals weaken, public hospitals feel it immediately. Waiting lists grow, access tightens, and communities lose services."

"At the centre of this debate are patients. These reforms are about ensuring Australians can access timely surgery and quality care, regardless of whether they enter the system through a public or private hospital."

"Nurses deserve fair wages, and hospitals must remain viable employers. But wage decisions made in one part of the system ripple across the entire sector. A transitional Commonwealth contribution recognises that reality and protects both workforce stability and patient access."

"A legislated 90 per cent benefit payout ratio combined with a Mandatory Code of Conduct, as well as targeted wage support, would stabilise funding settings, improve transparency and protect patient access to timely care."

-ENDS-

APHA and CHA's joint Position Paper is available here: Strengthening the sustainability of Australia's private hospital system

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